The MarketVector™-GammaRoad U.S. Equity Strategy Index (MVGMMA) employs a rules-based, adaptive process to allocate between U.S. equity exposure and Treasury Bills exposure based upon its fundamental, behavioral, and trend-based measures for U.S. equity market risk.
The market churned its way through a choppy September as the S&P 500 Total Return Index returned -0.35% for the month, which brought its year-to-date return to +12.75%. The MarketVector™-GammaRoad U.S. Equity Strategy Index (Bloomberg: MVGMMA Index) once again maintained its positioning throughout the month and returned -0.14% in September, which brought its year-to-date return to +5.59%.
The persistent rise in interest rates seemed to dominate the daily market headlines throughout September, and understandably so. The 10-year Treasury yield rose 54 basis points to 5.29%. This marked the largest monthly rise since September 2022, and the highest monthly close since March 2002.
What does this mean, if anything, for the equity market? The last 70 years of market evidence demonstrate that the prevailing trend in long-term interest rates clearly matters to long-term equity returns. We recently shared our analysis of this evidence in our June update.
To consider how this historical evidence applies to the current environment, we find it helpful to understand how rising rates can impact equity returns. We see three primary channels through which rising rates increasingly represent a headwind to the current equity bull market, as covered in our latest monthly update here.
About the Author(s):
Jordan is the architect of the MarketVector™-GammaRoad U.S. Equity Strategy Index and co-founder of GammaRoad Capital Partners, LLC. Prior to launching GammaRoad, Jordan was the Chief Investment Officer for Legacy Heritage Partners LLC, where he managed the institutional private foundation and family office portfolios. Before joining Legacy Heritage Partners LLC, Jordan was the Senior Investment Strategist for IBM Retirement Funds, where he was responsible for asset allocation and investment risk management for the U.S. pension fund. While working at IBM, Jordan was featured in CIO Magazine’s 2015 Global 40 Under 40 issue. Prior to joining IBM, Jordan was a Principal in Mercer Investments’ New York office with a focus on asset allocation, strategy implementation, and manager selection for endowments and foundations, corporate pension funds, defined contribution plans, and insurance captives. Jordan is a CFA Charterholder and holds a Bachelor of Arts in Economics from Emory University.
For informational and advertising purposes only. The views and opinions expressed are those of the authors but not necessarily those of MarketVector Indexes GmbH. Opinions are current as of the publication date and are subject to change with market conditions. Certain statements contained herein may constitute projections, forecasts, and other forward-looking statements that do not reflect actual results. It is not possible to invest directly in an index. Exposure to an asset class represented by an index is available through investable instruments based on that index. MarketVector Indexes GmbH does not sponsor, endorse, sell, promote, or manage any investment fund or other investment vehicle that is offered by third parties and that seeks to provide an investment return based on the performance of any index. The inclusion of a security within an index is not a recommendation by MarketVector Indexes GmbH to buy, sell, or hold such security, nor is it considered to be investment advice.
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